§ MR. SINCLAIR (Falkirk, &c.)
asked Mr. Chancellor of the Exchequer, Why a different method is adopted in dealing with Co-operative Associations, as regards their liability to pay Income Tax, to that adopted with respect to other commercial joint stock undertakings and private firms and individuals?
§ MR. A. H. D. ACLAND (York, W.R., Rotherham)
said, before the Chancellor of the Exchequer answered that Question, he would ask him whether it was not the case that the working men who were members of the Societies had no desire to evade the Income Tax, but that they had always been under the belief that 99 out of 100 of their members would not be liable; and, whether it would not cost the Exchequer more in consequence of the number of claims for exemption which would be sent in than would ever be paid by way of tax?
§ THE CHANCELLOR OF THE EXCHEQUER (Mr. GOSCHEN) (St. George's, Hanover Square)
My hon. Friend who has just sat down has answered the Question of the hon. Member, instead of asking another. There is a great deal of force in the point of view put by the hon. Gentleman. As I find that a good deal of misapprehension exists in regard to the levying of the Income Tax upon Co-operative Associations, I am glad to have an opportunity to state the real facts of the case. Every shareholder in a Co-operative Society is liable 680 to Income Tax if his income from all sources is over £150 a-year. Where a Society consists to any great extent of shareholders whose incomes are over £150 a-year, it is found convenient to assess the Association direct, and the existing law has been framed to secure that as far as possible. Where it consists almost entirely of persons whose incomes are under £150, the trouble and expense of assessing the Association, only to return the tax again in most cases to the shareholders with an income of less than £150, far outweighs the advantage derived from the direct assessment of the Association, while the liability of any shareholder, whose income is over £150, is not affected. In the same way, a partner in any business, whatever the profits of the firm may be, is entitled to exemption from Income Tax, if his income from all sources is under £150 a-year, and if the firm to which he belongs has been assessed the duty paid on his share of the profits is returned to him. There is, therefore, no exemption of Co-operative Associations; but the tax is not levied direct upon them, because, in most cases, it would have to be returned to the members of the Co-operative Associations; and it is with the view of saving expense and trouble to all concerned, in cases where it may be presumed that the majority of the members of an Association are not earning profits of £150 a-year, that no tax is levied on the Association as a whole.
§ MR. GOSCHEN
My hon. Friend must give me Notice of that Question. I am not prepared to risk any portion of the Revenue by an impromptu answer.